GIII - Earnings call transcript Q4 2019 | G-III Apparel Group, Ltd.

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Operator

Welcome to the G-III Apparel Group Fourth Quarter and Full Fiscal Year 2019 Earnings Conference Call. My name is Paulette, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Company’s Nackman, now CFO. will call Neal over the I Mr. begin. you Nackman, may

Neal Nackman

and morning for Good you thank joining us.

Before today’s the like statements forward-looking we to remind securities meaning the participants would begin, of that statements the within made call session Q&A on in and may constitute laws. I federal certain

condition not could actual or financial any results are SEC. forward-looking forward-looking statements. statements. the cause duty in or no implied results of Important differ operations materially to statements with company The differ in Forward-looking that to may guarantees and factors actual of update undertakes by the expressed are from documents the company those the the discussed company filed

non-GAAP are per EBITDA, net to adjusted In non-GAAP all and income refer addition, during the income, we share which call, measures. will financial net to non-GAAP

We GAAP to Goldfarb. Chairman also will financial to call have measures which these on over in now our reconciliations provided is non-GAAP Officer, Morris release, I Chief Executive website. the available press measures of turn and our our

Morris Goldfarb

morning us. today our Chief joining Aaron, Officer; our Sammy President; Neal Goldfarb, With Chairman Jeff Executive Vice Officer; thank our and and and Operating are Miller, Vice you Wayne Financial me Nackman, President. our Good Chief for

completed pleased to net report record We non-GAAP are net that a EBITDA, of and we’ve sales, year income share. per

very am business in growth Karl largest our also Donna in and a good stores product Klein, in our Karan led was brands, a Tommy of and success. spite We’ve the that profitable Our by and five DKNY full-year big The own year we're Tommy business Calvin first sales into our for having our by foundation had Lagerfeld. of a substantial most Hilfiger was DKNY, loss and Calvin And of the continued well-positioned business of Karan, Donna anchored closing I growth to Lagerfeld. the Karl strong DKNY, organic Hilfiger future. Klein, confident Bon-Ton stores. department built due power

results. Fourth last full-year compared per net in We year. approximately quarter and income $XXX million $X.XX net quarter to growth of non-GAAP fourth to the at X% per year. sales quarter quarter delivered last fourth share $X.XX the $XXX look share diluted let's Now diluted was fourth from million

sales year, $X.XX billion $X.XX fiscal billion year. we the in prior full to share to $X.XX grew income Non-GAAP per net prior the $X.XX by in the XX% For year. from increased XX% from diluted net

for year. Our year prior increased an $XXX of adjusted the to million, increase XX% from EBITDA the

disappointed retail with Della Badia business. our we Fran are January, our Here that some Retail beginning business. and Retail. Coach, of results the having great years on told of Fran retail that our hired retail at last own we you businesses, merchant were our a with savvy very experience, On President and this to our has In retail options and call, XX table. the of help we details earnings smart spent were all as ultimately is American Head of North Business as transform all business

XXXX includes of XX a we process end and with the leave us locations store stores. coming approximately We will of converting a XXX year, of year, approximately fleet which In approximately additional recap, DKNY DKNY stores. XX at fiscal of of Karl our of fleet stores. Lagerfeld include also to fiscal approximately will fiscal a stores. XXX. XX an locations, This stores, the this the in closures plan closure XX XXX with had ended fiscal the store XXXX, As net we're XXX representing year upcoming total In

a are for significant at Karl look the double-digit upside from functions both changes and operating season. full-year our both fourth $X on to are make our upcoming as merchant back and fall for We've quarter have nameplates. working to toward performance We operations. retail are million additional Lagerfeld and had comp from significant teams and planning to taken We conversions DKNY we offerings continue expenses our DKNY the actively in focused Fran and support positive Karl salaries performance Lagerfeld see our eliminated and of already office very annualized approximately merchandise hard and stores.

get is reduce closures, our to further implementing continued design whatever significantly goal changes. in are business the this necessary store and take efficiencies steps operating and we additional obtaining Our losses year retail will including product to there,

throughout with business businesses. performance sales excess the We've this in our wholesale of year. of Now Klein $X pleased let's turn concluded of billion. XXXX products with Calvin net to the were our fiscal We

quarter, men's and was As well Calvin fourth for performed and and women's outerwear. dresses Klein the led by

we On our sourcing quarter growing with in merchandising, design, the by PVH. net and heels sales XXXX, and powerful of combined Hilfiger of strong about business at sales of XX%, the fiscal These XXXX. in XX% are led sportswear growth approximately sales Tommy in registered $XXX in Tommy by and brand the of more expertise million. results combination did the fourth dresses, outerwear. than marketing with and fiscal execution illustrate now partners Annual management performance significant our well selling our net doubling

about distribution product and grow this the store the over next meaningful aggressively. business to to allowing years. more and the We're Our continues grow broaden, business opportunities expand us department several excited to

let across Paris leaves We so continue The the Karl's Karl Mr. and XX% aesthetic net for growth and Lagerfeld, The fashion has design has and of live loss on. me an at will brand which have the to and proud was always Paris G-III this led with by sought innovator, acknowledge with Karl business, Karl he Karl to We moment fourth sales legacy Lagerfeld worked our of core the XXXX handbags. will influence convey are fashion capped icon one of to behind of quarter off globe. take sportswear be powerful brand. true I designers His a provide of and many time, the to the a update known impacted Before Lagerfeld. loss Lagerfeld on our greatest Karl.

XXXX, are For than more XX%, of excess grew $XXX net fiscal million. now in sales

North -- believers and market of ahead opportunities We growth are see in American over which the The we in significant continues the for years. north we several for introduced the big this Lagerfeld beginning momentum us to brand, Karl to next XXXX. of

DKNY Karan on Now own businesses. our and an Donna update

Following sales see of over $XXX the annual brands reaching and grew our launch of successful by of DKNY these integration Donna fiscal we're range Karan to wide businesses in XXXX. XX%, a million net for and pleased the categories, that

by outerwear. we build can This this and business distributions, to brand business about and quarter fourth growth first repositioning of learned much forward. was continue going how full-year and shoes, Our our handbags, led the year was sportswear past we've

On have Swarovski additional great In expand optical meaningful lifestyle to In the jewelry licensing DKNY in -- product our fashion as Karan and the in partner for Southeast building the categories. a our added eyewear globally. distribution with growth our to some both new Middle good but presence introduction Marchon as over and and profit global great see Korea. DKNY, in international sun has accounts. Donna are now way as XX front XX Russia, we to and through and venture of distribution of for joint an opportunities. a international points Asia China, driver, our we sale points of additional We into partners brands see important Europe, over such We've sale businesses expand continues markets East, licensing with not only continue XXX and partners countries for

we Europe, recently underwear, DKNY the lounge and U.K Just for and socks executed Russia. license for a men's wear, swimwear

the leveraging job, great a XXX% fall done past this launched has season. team campaign, holiday unique Our which DKNY and

spring into talent. updated fresh campaign this highlighting approach, We will and with continue the an new

cities, goal and through brand DKNY campaign elevate awareness and campaign London, feature for Toronto, Dubai our just off including New City, and units key York editorial in high-impact is increase to Our global outdoor coverage. season The the product and Mexico has kicked share offerings media with our City. and spring global

We channels. followers will U.K now we lifestyle fashion also and have include million core significant over to and publications presence X exposure. across print and all digital reaches will DKNY social media continue in U.S

The in marketing opportunity year major to look collaboration the first Karan past for with product DKNY will and cobranded include continued sites, co-branding This of capsule a audience. fanatics.com, DKNY's women's to to and success spring. of forward ahead. years. to this continue a the distribution to leagues This DKNY dkny.com, invest Stadium we the significantly news Sport solid launch and the DKNY leagues e-commerce next consumer growth the leagues over Donna special will We wider share advertising ever expose several of the and Further Macy's. us and we've excited and sports Stores foundation I'm with DKNY established our

well-known really these Our beginning pay is to off. power global strategy brands acquiring for

about talk business. to moment Let me take a outerwear our

posting category While great remains by let year, Levi's, to Tommy and each for had Karl us. Calvin we’ve DKNY, led across good forward season season locations Hilfiger, at another We our Vilebrequin this XXX a performance passing look comparable with and locations big sales by own solid the outerwear Guess? XX more a become with outerwear with We mid Klein, diversified Lagerfeld. seasonal has broad-based our swimwear a brand year combining delivered operated a upcoming brand Currently a Vilebrequin, presence our approximately single-digit countries. fall. distribution increase. status those partners,

We cities and Shanghai including are Macau, into Beijing. new key expanding

a the distribution. and and we of And business. further our continue to we Vilebrequin, expanded business own addition, and online our wide an through In developing building biggest partners, of retail our part through digital presence. growing purchases share websites is more Corporate which importantly for the wholesale ever e-commerce of to looking we're capture push lastly are with sites, this

partners that viewing Our work closely the possible. online our ensure manner consumers very marketing of best digital in product retail and our are teams planning with teams to

conversions results. for fiscal detailed influencers see to business. drivers our now sales. discussion continue higher a Neal a to effect I significant of quarter will and and it marketing, to us ahead Overall, pass full-year XXXX other social opportunity working online looking of grow for fourth to also are for We beyond, our through and we

Neal Nackman

XX% our segment of XX% by last sales our decrease for the $XXX us. stores, a compared year sales from increase quarter segment affected in for of to at DKNY period DKNY number Net by segment sales for were sales to increased increase. last our increased for approximately Tommy XX, same Hilfiger the Thank operation and of operation X% year. sales quarter $XXX our reported sales negatively approximately retail million. of million, of of sales approximately in same-store the and Bass stores. operated from this were XX% our Net million. $XXX million same-store of were We million $XXX G.H. decreases wholesale stores X.X% stores also lower X% million ended fourth January the Net our the of Wilsons the $XXX retail XXXX you, Morris. operation Net $XXX main drivers to brands

revenue gross year. margins Our the operations XX.X% to the gross the of benefit prior margin the operation accounting were the compared quarter. margin this reduction gross was compared the as to a This prior our acquisition accounting. percentage to XX.X% related result decrease result the our prior in was from in year, to to compared Similar of expense the in XX.X% our percentage percentage the in XX.X% the recognition. percentage period. the The in as of year The sales prior a new the was fiscal segment quarter for XX.X% fourth in for XXXX of of lower valuation stores year's in gross in retail quarter segment to margin DKNY wholesale was of result reflected to in wholesale year primarily cooperative the year. reversal XX.X% application of this net compared as prior in advertising the of of SG&A reclassification reserves a of gross operation Gross rest margins segment margins our DKNY rules year's

had the XXXX, a continued The will the operation. for promotions. retail fiscal anticipated margin retail year, a DKNY result was our gross operations than Wilsons the lower to forward in mostly higher lower also stores was on in The be in due comparable Going of as for gross quarter pressure we basis. promotional our margin percentage gross last margin than

non-cash spring the In the in revenue million addition, the $X.X provided than same into support period reclassification, SG&A to to from Due higher in decreased last ensure season. shape $XXX that expenses the our this of inventories million share Hilfiger $X.XX wholesale quarter net share income million recognition $XXX year. revenue result a share in planned base cooperative this the in segment million markdown Non-GAAP the quarter and year are was expenses quarter. diluted to a specific income of prior impact the benefit year's good last see year. $XX Tommy reconciliation per our in and or advertising to sales. treated reduction loss of per million were expenses SG&A the as SG&A. the in for growth. we're the imputed now to charges DKNY compared income results. or fiscal of expenses part non-GAAP $X.XX the in net Further, a continuing year, to net Prior compared $X.XX to Net of of primarily as these were leveraging heading related to the Act. one-time to Non-GAAP per press our included interest, share per all the year's for tax quarter The asset GAAP of of in fourth charges, results quarter $X.XX transitional exclude diluted Tax impairment release new in was prior $X amounts

operation sales billion Bon-Ton operations net and increased to reductions of year compared last of Net our and the largest decrease by bankruptcy to lower drivers to XX% billion Calvin retail brands the growth. increased G.H. $XXX The on Karl the effect Net approximately impacted segment both of for million, X% XXXX sales $X.XX segment the occurring was sales in the Klein product. stores Lagerfeld of $X.XX year. This at due Hilfiger sales at $XXX fiscal previous the billion. from the were DKNY, million. year, is -- to the largely For growth Bass gross this Wilsons. adversely sales from with XX% our fiscal were $X.XX billion wholesale wholesale $X.XX Tommy approximately sales full main

fiscal XX operation the the Wilsons For comparable operated. at X.X% sales at were comp negatively also full-year, X.X% number retail by stores we segment Bass. the the DKNY to for by XX% decreased decreased full-year. Net at operated and compared sales of end of of XXXX. XXXX decrease stores G.H. affected end in increased We sales of the the less our fiscal

XX% to segment XX.X% to the in The margins of a SG&A our in percentage this about the margin was reclassification gross margin expense percentage segment margin advertising gross fiscal current operation The our was the for cooperative prior percentage year. percentage operations compared in year XXXX year. sales. reduction includes operations compared reduction reported to gross This decrease wholesale wholesale gross our Our year. XX.X% XX.X% in in in was previous XX.X% percentage. compared of prior net reclass from margin XX of in segment to retail point the the impact basis years XX.X% The gross was to

million decreased million sales. offset expenses revenue were Wilsons lower the discussing margin of the been were margins DKNY year percentage Bass year gross year, to treated improvements prior half to in the these the As valuation reduction Again, we've higher primarily all The and expenses for of in about were of reclassification, in to of where the of reserves our gross a the of acquisition $XXX last of this from year, benefit SG&A year, reversal compared $XXX stores Due the expenses million now Total as recognition the were result the for included prior year. in as advertising first year, the by to in this as stores the $XX flat co-op previous SG&A. second our year. prior promotions to because part are half net accounting. year

prior or compared result As XXXX and SG&A for $X.XX for of share income revenue compared the expected, $X.XX was year. leveraging to XXXX net we per to fiscal as our previous the a Lagerfeld $X.XX income are DKNY, year. diluted in seeing growth. or in was base diluted per million per Karl the Hilfiger share $X.XX million Net the share benefit $XXX Non-GAAP primarily of fiscal a $XX Tommy

offset prior sheet, balance now short-term as accounting our variable at receivable, liabilities to liabilities. as an in increased reported at the recorded the Looking year. a end from accounts million previously connection The million $XXX which accounts consideration, receivable to rules were new be $XXX required reflected of with

basis, Inventory by also approximately -- have Excluding new now now would classifications receivable is of at accounts exclude growth. levels anticipated forecasted with new and launch have impacted impact of the accounting the than and $XXX our been excluded to XX% sales been is sales the increased and our grown inventory returned million. XX%, growth. the inventory. rules with higher the On This lines. DKNY consistent a classification, approximately implementation consistent development of product the comparable increase Inventory have which new up

and on inventory of year. Chinese approximately $XXX the to We at this of million outstanding of year. of $XX million received advance the compared approximately at had earlier previous end in in year New anticipation this $XXX million the We long-term we’ve Year. year end CapEx addition, spent debt the In the

balances to year-ago. our In addition, end at this cash year $XX compared the were million $XX year million the a of

opportunistically year-end to repurchase approximately in cash balances at under higher Our repurchase were utilized million we share XXX,XXX program. even December after authorized our shares approximately $XX

As guidance. for our

approximately year in the sales to fiscal XX, $X.XX billion For billion January forecasting ending XXXX, of we're compared fiscal $X.XX net XXXX.

count comp and We Bass and increases $XXX shares. full-year. in fiscal per adjusted $XXX or the million or in to reducing XXXX million between to anticipate segment million share at a losses assumes $X.XX XXXX. weighted fiscal $XX diluted per $XXX between both approximately income in our compared expect income net million single-digit of million diluted be We're retail $XXX fiscal and in retail $XXX share for average to basis, We to $X.XX net $XXX $X.XX non-cash of and as to million compared income net the and million assumes we fiscal of operation anticipating Wilsons by adjusted share. between the million between low XXXX. or XXXX. This flat interest This million, are $XXX On imputed adjusted $X.XX million million $XXX non-GAAP for full-year and projecting share per $X.X between expense, XX diluted EBITDA $X.XX diluted of EBITDA an excluding

for double-digit year retail retail comp are planned the store planning Total flat to down. about count DKNY comp average we're a operations, increase. as prior For the at DKNY sales is

and revenues As are approximately grow for licensing operations, wholesale DKNY's planned to by XX%.

ending diluted to For income million forecasting XXXX, $XXX sales and we're between $X.XX previous of our or million $X.XX $X -- sales income non-GAAP and in On quarter net XX, first share income $XX net share XXXX. of first share. per of million adjusted of non-GAAP million million This share sales the fiscal as in diluted $X.XX net sorry, $XX.X to year's of income $X.XX XX, net compared compares are we net we're the reported and fiscal million $X net and $XX between million or per $XX April between approximately per quarter. per XXXX, an or diluted net forecasting and $X.XX April forecasting basis, and $X.XX diluted quarter $XXX million or between

for concludes comp for we Wilsons mid combined our single-digit will the retail Morris closing comments. my business the and back That As and operations, assuming I sales for declines at comparable remarks. increases call now Bass to DKNY. are sales turn single-digit

Morris Goldfarb

us joining today. for you Thank

of to ourselves global provider deliver grow global ways we execution. own our I an for our find results of that at our exceeded the to as teams expectations. said In their and this what an position their a dedication, fashion by accomplished As continue year beginning drive of and ever-changing year proud a record We products. of further call, focus, leveraged is five I’m important retail brands G-III. power have landscape, this to

over With organic we growth G-III have the next significant several achieve to today, power brands can continue years. the that

of our strength right your we take we’re Thank the sheet, ready to you opportunity. now can acquisition capitalize balance and on also With the questions.

Operator

Capital Instructions] Edward KeyBanc Please And our from question comes [Operator go Markets. Yruma ahead. from you. first Thank

Edward Yruma

a my for Thanks question and solid year. on morning. Good Hi. congrats taking

in at Just fiscal business upcoming the insight then little changes profitability is business the what some assumed the bit particularly to And for it you stores maybe year? relates year. made kind as improvement of how digging a maybe Fran perform? retail, little bit, Could the and it into as non-Macy’s just us expect or into is has follow-up you. DKNY you next a how Thank a that to for highlight this performing of give of

Morris Goldfarb

the department fact to -- the immediately got The distribution not the question, Ed. brands performing was no and very basis into broader It's world very that added always a just base, committed of much it's into offer In your doors longer always twofold. other well. customers. its we in place business. our them exposure get it's don't a department us. much of distributed brand sportswear to beginning news. good them. fact feature exclusive today store Pretty is for good Macy's is through for is are internationally. many on is The is concern still immediately for is news. news grow The for a department as we Macy's. for to they Thanks stores brand It's the Macy's. The there so the It's how that with one -- broader as believe blended distribution we ways bad a States. news about good is the stores, fact that store The good footwear, to actually our XXX continue to to United full The began department compete got good smaller that the and we're international Morris. Macy's that business product they It's for In enhance price opportunity components the DKNY it's good apparel the

is Middle appreciate Far in way. business Europe our see East both the Macy's customers Our customers do and the and it that Asian it beyond so East same

amazing XX Minneapolis, know, businesses. our spearheads The couple good relates for I as your -- Fran. retail it -- she She to kind it's probably in months. to has times except She's period a an the and doing short into time. Fran in understanding question or is X driven news. immediately of don't herself of of job all Vilebrequin So been last all

The changes know base some buy the how home has we of we retail. to leaders influenced She gotten to As product. for choices work on product, retail. her major how our in our She's looking we make, forward know, some for Minneapolis estate distribute you is that a the to it's major with we and pleasure G-III. are we that how occupy real retail performs and changes

-- savings, that million major in cost So, also go immediately cost all We’ve Fran Fran's almost is across our reductions $X in some instituted over staffing. found brands.

today it a good can I Fran. So would say was hire I to respond Did else miss Anything decision Ed? I question? to

Edward Yruma

just detail the exactly maybe little No, give how how much of -- profitability much on guidance a improvement the assumes? guidance

Morris Goldfarb

retail? On the

Edward Yruma

Yes.

Morris Goldfarb

I'll Retail, that losses for as doesn't in are we less take to Neal And million this said, conservatively, projecting in might that $XX year any change a add on account radical one-time retail. hit. that we conservatively decide real

Edward Yruma

much so Thanks it. Got guys.

Operator

question And Murphy ahead. our Please Piper go Jaffray. next from from Erinn comes

Erinn Murphy

Thanks. a Good you of the North question bigger for had today. guess, in I American Great. Morris I morning. picture environment terms

What started retailers, seeing in are our and you about the a channel of you the here are from and the currently? As there out promotional from spring, perspective? an have a proceeds inventory amount do out inventory you environment how they perspective right feeling broadly

Morris Goldfarb

that real a we I as G-III, to estate had. a ending we’ve relates and for is can we how we've inventory dominant as taken managed real at have estate provider than we department to key became speak appropriate scale position only ever it and is larger a to a -- battle never stores

in we to presence individual it's Our the departments easy service, see. real that

My being than the being place brands. know “Oh the all allocated are we beyond if say over you the it's is larger G-III that space store, over all ever is a And department our any in into department God!, been. walk much place” store, you you If

service. getting the of the better better present with in the we're better perform So we because better simply than most cooperation to department all than leads that data more in stores. itself we that and influences collateral us maybe to requires many fixturing, It maybe product and consumer need better inventory

that influences So business comfortable get teams that very tariff make acceptable We economic really our our it's mode business I at regardless and store as might the our differently. good as feel our that of make the advantage me and for our to margins on consumer own surround same time make issue is a of well provide the us still whether that control, of growth cooperation we that manage some relationships. can't for buy choose the margins on it's teams an ourselves. sides, the that the economy that very choices, issue, department a that well. We drive our We retailer both take

So we're manage business place. customers our I our We think in than a differently unique does. for competition our

the vertical group future. pieces We’ve We less a stores Wilsons our that a now are projecting viewed bit retail. service Bass some that's operation to of XX we little the number a The for own product than we end the growth Karl with differently. with create are XX. and year, for not are year a possibility stores Lagerfeld businesses stores at Right fiscal of small And are in a about where we XX are that the DKNY. the our and these now

be them, trying future. we but can't, are if not to fix part We of may the they

we maybe a we better dependent need them partner because So being makes makes on and it us and us customers our for make customers vertical our not more work.

Erinn Murphy

Got it.

a of other let couple just then. Well, Okay. housekeeping me questions ask

On about in What us growth Bon-Ton in was and embedded small how for ones season. impact book QX? big in that? in the order said XXXX the you quarter guidance outerwear Maybe it talked share the two Neal then, How with retailers you, your in a just season, it you thinking Thank fiscal expecting and think margin. QX then model, the And on the for gross you is the -- about I full-year you you. if XXXX? good 'XX are are margin and probably can good being fourth

Morris Goldfarb

Erinn, is far are planning Coat as case when our great project retailers year fiscal off flat. come planning the our as they they XXXX, conservatively. how plan But They year. most the usually of it that’s increases, So, don’t for out

are behind outerwear. gets make We in. what outerwear. always, believe money in always, that we believe We always resource We in a

margins They comes store outerwear department Retail attention in business, department provide good. sportswear. out margins better that if best are the of outerwear do for Our outerwear. in much our we they you margins than partners to in pay store margin

arises we very So part, and the one, but the not season business. shows opportunity itself when a at season it aggressive to supporting get the outerwear the they’re as may be possibly good as into early

comfortable outerwear there significant is still coming we're in the that left So year. growth for

Neal Nackman

consolidated Erinn, a full-year, It we be far basis question, could gross margins or the seeing on on two. the year. tick up gross comparable for fairly as margin as modeling are a the a to prior

we of In with order mix book. of product at are margins. comfortable level. our full-year would pressure seeing as gross I wholesale And we the percentage margin think that’s wholesale that -- gross the first point be are both the and maintaining We this just in terms bit little quarter, at said margin, a

QX, quarter. Bon-Ton the year's prior the fourth million On approximately $XX in was

Erinn Murphy

Got it.

Okay.

and higher you just -- there of I seeing kind markdown maybe wholesale And environment just said reserves follow-up any that are what want dollar the or of just margin. Sorry, the at gross on given QX to currently. mix you’re

the making of margin? understand first want quarter that gross Just sure to I kind piece on

Neal Nackman

markdown be it mix, annual product which it's is that impact we negatively Yes, I could making it's -- there significantly our provisions. you well. probably will But would tell adjustments slightly some that as to

Erinn Murphy

you, guys. Thank

Morris Goldfarb

Thanks, Erinn.

Operator

Our from next question John Kernan from Please ahead. go comes Cowen.

John Kernan

to a everyone. strong taking question for Thanks morning, and finish year. congrats my the Good on

Morris Goldfarb

Thanks, John.

John Kernan

think and top XXXX It about about think from standpoint seems this and where you both where with Thanks. Can not strength. now for profitability talk help about us you for to that you you’re year, you overall longer-term but brand entering get can line and opportunity, Morris, your sales can to? a the be opportunity just Donna talk margin the target Karan.

Morris Goldfarb

well John. when it, $X basically not the Thanks, if that of off number. in about stated partners. was bought DKNY opportunity our it of we product alone number that we be G-III anything, billion am greater produce, could a I that believe I excess could forget licensing

the opportunities learning globally. We about are first

demographics that the that North acceptance we profile very never dynamics opportunities the the And a are all and We American is, market, much took the of we're the We of of There served sudden of points created. of up but well accepted mix the of it's producing. the we're that beginning not that brand, product, the to the and control the G-III accepted. globe change product were had. we product the out turns that and younger they're areas accepted. brand producing, it we some at And faster see might internationally were in well the concerns price conservative be world being moving incredibly

we markets, as those huge. opportunity begin penetrate I to the So is think further

say over in So $X that -- you’re near comfortably have to if safe would billion future. we believe business the I

itself in that million and $XXX which grow to gets brands provides another continues without enhance revenue to product of probably globally, the licensing to Calvin $XXX that million where released Our presence further like Hopefully or retail that as penetrates it brand. department all we one will of the as well Tommy stores expand. Hilfiger it Klein, in the becomes departments continues all

Neal Nackman

percentage us the licensing just businesses in. John, of that royalty think continue one we strongest, significantly. one we business not paying that as helps be strongest margin income then And, just significant fee this this -- in operating Morris terms to of to anybody, if a comes should run. the operating mentioned, that in Again, we're we got not that addition to And out margins,

a improvement to and that. low margin see to were see XX% as in goal. single-digit will we a This So positive year, XX% operating operating margin probably still we we past that business continue

John Kernan

I Neal, just follow-up you ask capital And if can help. question a [Indiscernible] allocation. on

quarter want and you You’re opportunity? about then we next? evaluations leverage balance difficulty] where Thank sheet, obviously [technical take fourth [technical do in terms and now the that difficulty] share opportunistic you. do And you how the buyback. this in see with to that and How of opportunity the ratio more, think within year

Neal Nackman

question, part your the little a John, second up you broke bit. of sorry

ratios, The in was EBITDA. year debt $XXX look, average terms first our part of of million. debt last We ran $XXX million about about

is think in situation if last concerns this we great the I be, took on, at and any think generated company were are should in year. late of that point. flow cash leverage. terms there acquisition I good those with the The the company leverage We certainly that we

expecting million. about could the this free year are be flow We cash $XXX

think I from sheet in a balance So are we shape great standpoint.

John Kernan

Tommy follow-up. fiscal Donna And incremental Karan it. quick just are for of and [technical Macy's then maybe opportunities a And the outside difficulty]? this What Got

Morris Goldfarb

not throughout Macy's department So out floor. the specialty tier brand or were the that Again, into stores classifications brand on Tommy it it a is exclusive. the performing is all Tommy exceptionally well. and the the Hilfiger broke existed distributing store country. it better mid is -- really We And to floor we never chain department

an It's to a inherited area, Macy's with we us The bifurcated and we have didn't and exclusive pretty working small, that doing area, into is changing we and on sportswear, the be of area, collaboratively of We million model that it, with scale classifications Calvin $XXX also that business. with exactly a not a the have agreement it the have -- inherited. right business business a ourselves, a piece was call Klein. have sat an double PVH, are what is PVH the sportswear we floor that's succeeded performance last and area, relatively business. between a for started dress gave Macy's we have came of And about to much We’ve nonperforming all. years. expand size we've the Macy's. $XX to the We now have It million coat suit the brand that a we we it we two

we into think doing didn't there's don't been you could and So where we tell has $X it we grew is opportunity the PVH to. of helping I better expand that there great at, Tommy areas anything is know $XXX that from out for there the grew marketing expect it even peg and to I brand but million, don't I $X world-class. us to million to million that's that

So great it's asset. a

an line have line to growth We the are fortunate top And for to important and both bottom it. component our it's future.

John Kernan

Excellent. Thank you. Best luck, of guys.

Morris Goldfarb

Thank you.

Operator

next Our from Chethan Please Mallela ahead. go comes question Barclays. from

Chethan Mallela

Can gained quarter, And for Hi. the take context licenses impact how brand recent in to you’ve fiscal brand the this little and quickly to market? you of And the Bon-Ton can media bandwidth product performed on new just from excluding 'XX? that what assuming able a just Klein licenses, your potentially category us provide standpoint, to you’ve how the a fourth get during Calvin Good capability on you’re remind you morning. just been given historically when brand. some for reports, from past in of additional

Morris Goldfarb

will how I is we start fast What your with last piece, bring really product to market.

took business If actually brought significant nanosecond. and to the in it Tommy business you’re listening that we a on small very to was very Hilfiger,

We to we for it how and years the there source. barely are know We business. of We the size staffed appropriately. quadrupled two

an production domestically have and team, We amazing both internationally.

quality be could Our get it's governs domestic shy, whereas anyone they can how and we and international the country, get team rapidly every team our believe. opportunity we of run there compliances into factories that more use on than they're not actually every

go I do. to piece. be brand read the the press Calvin Let's Klein to same that There you seems the out. some maxed feel is the way that

You that’s us. our can't the It's all. by performing at that We don't tell piece business. believe case best of

Our is on and there retailers we We It's the grown top we've peak. line. asset the when room -- that company line unimaginable believe our brand is we that what basically -- believe best has. money asset is find both with peak, again, print bottom that to significant an

what same I occur occurs. feel we which as in can't specific about they trade pulled our to to no there get we probably concern the something brand on touching the beyond some you would extraordinary answer the brand. or how our control. you situation the the think unless unique department control how stores is if So But might virtually world that economy, Again, is

Chethan Mallela

Great. Thank you.

Morris Goldfarb

brands, great it. like we love one have So to another just

Chethan Mallela

fourth internal a saw where just seems both versus and Thanks. And quarter. comps than 'XX then plan you I outlook? anticipated detail gross that to are Wilsons. the a a just on you underperformance comp flat Can for draw bit lighter more margins, then low your It was any Great. on models? return supporting changes the follow-up like quick on maybe little you during little to And a fiscal think single-digit some maybe that the

Neal Nackman

at been with that expect we the got arrival Wilsons -- look It in Wilsons an on of in was expected. terms comp so through will with put place uptick actually the and Frans merchants business in that that more business we to going in more -- second Yes, of product the of than We've are anticipating promotional new changes. we half actually start will be year. next we’ve we performance that see has

Chethan Mallela

very much. you Thank Great.

Operator

question comes Jim Please next go And from from Duffy our Stifel. ahead.

James Duffy

billion the crossing portfolio A businesses. Congratulations mark. the morning. on Good questions $X few for you. Thank revenue to team the on me

marginal drags you strategic are more a not that candidates strategic, as guys margin that businesses parts $X.X base that few billion of the wholesale be wholesale could revenue any business there it's your in on view for de-emphasis So divestiture? grow, perhaps or revenue

Morris Goldfarb

crossing. one, years -- Jim. It for Yes, was Number overnight congratulations the thanks in $X career, happen by way. the process. the XX my didn't on this billion is This the

now another three impressed put another years. be graph we’ve on two So in and or you'll mark the

celebrity, we us. have licenses, for million are million, brands, not of we do $XX and company suitable call, been could as brand business a a divestitures the areas really the don't of they have as initiatives opportunity always do built from power was that. nonessential longer. in been mid-XXs that the So build through we for work assets, on they could second-tier housekeeping $XX This We G-III any

we’ve got they’re left of and and those So earnings, few to we where them. accretive pretty our they very work keep much independently

Sometimes assets. grateful one is is the and that own all don't a license there you of

our initiatives, past renew a on So earnings. here hit major taking when just it some We without move we of expire to right we to on. and on our these able be licenses inventory don't manage slip

our period. that call know you going adjust move you on closing worked for remember division that's solid fit three They a you it longer always out you planned, So for And to us. over and do I year that replace generally profile. two, you’re either are and don't no a a it it. for

we've needs team you to have manage. management that another And amazing just an done Sometimes that. asset

We to do that. continue

goes away So there's performing. a that’s no there's group not that concern that

James Duffy

opportunities be would Okay. more And Any you to it then sheet opportunistic? would where acquisitions, you the in spoke capacity. the gaps notable strategy to pursue balance for or portfolio see

Morris Goldfarb

in. broader think a than makes sector today just that world I you think the you're

It part of anything. have don't don't attention -- I doesn't we hard-nosed entertainment, any So a profile. music, our company I We’ve risk don't to to discount get apparel adverse. hospitality, discount be discount I don’t That’s don't I not discount digital. I been longer. are our discount

little than a on than We never -- at are most, the yet and honestly. we ranch. aggressive take We were entrepreneurs can aggressive bet heart, we afford. most more We quite believe little we what

would -- take have into this business. you would whole you would find find you transplant management different and if business, successful also think team I it a

have are just in fashion blood. We not we -- our don't

a take that's appropriate a partners clear to I why any can we run with believe -- focused understanding on takes what of and that’s have business initiative. it We what

James Duffy

in margin you this in the We as you the as little is across maybe reduction if And, promotional Okay. business hurdle and the million $XX losses, best back rate a turn savings business some one hold $X Neal, understand where run year? to with like you of seems see directed you. What to can and retail prospects SG&A flat comps look million are -- the for plan it retail out dial aspect. the gross that

Neal Nackman

point at flat business. this in pretty have comps planning the are to we Yes,

I hoping that that expense we that conservative, cuts, the plan got that is we're with are getting think out stores. that we Morris mentioned of

on up So about that. pick we’ve million got $X $X to million

different new So we keep a and the all what mind, in transitioning we’re a President brands with through we're really think changes stronger evaluating of and going looking and -- number but to the is nameplate.

lot to it achieve. should can So done good but of lifting a this get something there's be we year,

James Duffy

mentioned flow-through all does there you SG&A is of $X million that the in planned And reinvestment in to $X some that million or retail?

Neal Nackman

that we not is that There's see. the we -- cut investment a expense SG&A we savings. are expense yes, the thinking -- the cuts, No, on that significant

James Duffy

Thank you, guys.

Morris Goldfarb

for questions, Jim. Thanks your

Operator

Rick comes from And Needham Company. go from our Please Patel next ahead. question &

Rick Patel

you as DKNY into my I’m congratulations Good you. me well. can dig and Thank hoping a everyone bit. morning, international let add

for can about Just the can stores. a how you success you’re of operated talk as seeing, much growth us international through you update given the potential represented percentage directly on that And sales? brand

a Vilebrequin them you’ve of think the in concept. I number

well? as So curious with that do if DKNY you can

Morris Goldfarb

retail combination distributors approximately So, well Rick, are up States United outside that in. set the in DKNY. for of have that we XX% sales that's of shop a venues of and as shops sell we that our total as And

better. acquired States. and primarily United it a acquired. of different outside we are it we now States it was United a brand is We a So margins primarily great that far and the the rebuilding expanding on DKNY, the the balance us global is sale are States When posture that partly the because garner brought and for opportunity of of we we outside to than United

other internationally. buying they lives has of American in an If lives I manage than stores and like a we North would in years. and owner grow Kuwait United in we a expanding Vilebrequin continuation outside company-owned design Kuwait with or as the great that of is that a owner. it's with they’re we’re store, for their not generally, It's franchise part model product. a the in succeed where well XX fleet their and and nice had the responsibility know better the of The the product, product, the store The manage to stores. regions And States area. Vilebrequin given is that would And the as say Russia. the to they similar bulk number model. franchisees we've a franchisee have. company-owned is again, as the to is they area And approximately bought, franchisees. one we the So that have many or distributors they fleet Vilebrequin sell-through one the have It's model of

it's good for to So -- path a follow. us good for model it's a

Our $XXX It's you’ve is. sales. China. aggressive in Vilebrequin size the one, locations basically The small up business as and you. seen total resort The just strangely you’ve on brand. as Vilebrequin an is cookie-cutter, The store it million store is, a attracts every in is design gotten world. just we’ve in all. small It simple. of opening is in seen product amazingly with It's over the is luxury well-recognized like them

this son leisure is the luxury brand. they a As and their love and China and children particularly they and love and accepting sons, is way they their father do,

for great one that. seeing and it's China location. growth in So candidate we're a opened We've

there's in three and in we Macau, one are soon Beijing have and open. Kong Hong to Shanghai We and have that

with swimwear. create forward. we're about it's that’s product look going our going status, the rainbow than the extensions and consistent So about about we to going to about very that with is with forward a a it's are significant is that brand brand and this opportunity This it's what are product sunshine, blends water, to smile

Rick Patel

And on outerwear. a quick follow-up question

fall? the year, well. to inventories the to that like mentioned outerwear think shape you for book resources sounds order it you're this flat be about be up for supply ready would are you season we planning up but it's if flat, How as think does shaping I this

Morris Goldfarb

have are behalf. relationships the standing probably And suppliers our have longest suppliers. those we on position production our outerwear in take We a

it's the classification probably So chase. this best for company to

from with abandoned up have us set production take liability facilities have of because us, them They've Our defined many over Korea a they been to them Vietnam them, our and with been they without vendors that of never our and we China Indonesia to to South side. we've on lead with years. us never for XX where traveled hurt

And have us, response as inventory. could good great do are in most us. that quick best that of we’re we So support a we dominated do of that the them facilities and that for a needs, for far added the thing production only outerwear it's not as exclusive little to partners deal having the risk by needs bit of for the inventory

sense is So that good. -- a we communication, the their and vendors business that be it's well going clear We risks communicate accordingly. have it's to take

So …

Rick Patel

much. very Thanks

Morris Goldfarb

welcome. You’re

Operator

will I Goldfarb. back now Morris to the call turn

Morris Goldfarb

with for more being always a is to year years. today. and for you us. tolerant consistent we’ve and go. being of being years with you I consistent better us and Thanks of many Thanks that difficult This Thank for think those are better

you. thank So

Operator

and Thank ladies Thank participating and gentlemen. This for you you, concludes you may disconnect. conference. today’s now

G-III Apparel (GIII) 21 Mar 192019 Q4 Earnings call transcript